TDS on Salary under the Income Tax Act 1961

A salary is a form of payment from an employer to an employee, which may be specified in an employment contract. Salary is a fixed amount of money or compensation paid to an employee by an employer in return for work performed. Salary is commonly paid in fixed intervals, for example, monthly payments.

Salary in common parlance means any amount paid by an employer to his employees in lieu of services rendered by them. However, the Income Tax Act, 1961 defines the term “salary” u/s 17(1) to include the following monetary as well as non-monetary payments.




A provident fund is a government-managed, mandatory retirement savings scheme. It is managed by the Employee Provident Fund Organization. These funds also share some characteristics with pension funds provided by employers.

The purpose of Provident Fund is to provide employees with lump sum payments at the time of exit from their place of employment. This differs from pension funds, which have elements of both lump sum as well as monthly pension payments. 


Non Deduction of TDS on Interest Income

It is common for many of us to have a fixed deposit in banks which earns some fixed amount of Interest. However, if the interest earned on such investment is higher than certain threshold limit, it is subject to Tax Deducted at Source. TDS on Interest income from such fixed deposits is governed under Section 194A of Income Tax Act, 1961. TDS on Interest income is applicable at the rate of 10% if amount of interest in a financial year exceeds Rs. 40,000 (prior to FY 2019-20, the limit was Rs 10,000). Banks are liable to make such deductions. These deductions take place at the time when the interest is paid by the financial institution to its customers.


Brief Note on TCS with Applicable Rates from 1st April 2021

TCS or Tax Collected at Source is a tax levied by the government of India. Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. These goods or commodities are listed under Section 206C of the Income Tax Act, 1961.


 Income Tax Slab Rates for FY 2020 21

Income tax is levied on the income earned by all the individuals, HUF, partnership firms, LLPs and Corporates as per the Income tax Act of India. The Indian Income Tax is a progressive tax system. This means higher the income higher the tax and vice versa. Hence, tax is levied as per the slab system if their income is above the minimum threshold limit. These slab rates are different for different categories of taxpayers.

Under slab system different tax rates are prescribed for different ranges of income. It means the tax rates keep increasing with an increase in the income of the taxpayer. This type of taxation enables progressive and fair tax systems in the country. Such income tax slabs tend to undergo a change during every budget.


Important Changes applicable from 1st April 2021

April 1 has marked the beginning of the financial year 2021-22 and will bring a slew of income tax, GST and other important changes. Some of them were announced by the Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 2021 in February.

These changes are going to affect your money matter to a large extent. Changes like new salary structure, rise in NPS fund manager's charges, banking rules due to merger of banks, income tax rule changes in terms of EPF investment, etc. are some of the glaring changes that are going to take place from 1st April 2021. Here are the most important changes that are going to have its direct impact on your budget and monetary affairs.

Financial Management